It sucks to be a middle aged low income employee with only a month of savings to rely on

Sin Yee Tan
Sin Yee Tan

Covid-19 impacts each segment of our society differently.

The well-educated middle-income workers are mostly in jobs that can be carried out remotely and would experience the least impact to their income and lifestyle. While the lower-income workers would suffer the most as most of them are in frontline jobs that cannot be shifted online.

DBS has now published actual data from their 1.2 million non-wealth customers (means not high net worth la). It highlights the disproportionate economical impact that Covid-19 has on the lower-income group.

We have done the hard work and gone through the 36-page report to highlight the key findings for you.

1 in 4 customers reported more than 10% decline in their salaries in May 2020 (and the number is on a rising trend)

Jobs have been saved but salaries have been cut.

15% of their customers experienced more than 10% pay cuts in March, that percentage has increased to 26% in May. We may see higher numbers in subsequent months.

Conversely, this also means that despite a historic decline of 13.2% in our 2Q GDP, most of the population (74%) had their income preserved. This was likely due to the $100B budgets rolled out by the government.

Almost half of the lower income earners have suffered more than 10% pay cut

Previously Alvin had mentioned that WFH isn’t for everybody, especially for the lower income group,

“A programmer is able to code at home but a construction worker can’t build remotely. A banker is able to advise clients on Zoom but a masseur can’t massage virtually. A teacher is able to share the knowledge through online tools while a waiter can’t serve dishes when there’s nobody in the restaurant.”

The data seems to support this.

Of the segment who earned below $2,999 per month;

  • 49% have suffered more than 10% decline in their salaries,
  • to make things worse, 51% experienced more than 50% pay cuts!

The sandwich age group experienced more pay cuts

The age group between 35-44 experienced the worst hit, as compared to other age groups.

The extent of income deterioration among workers in the 35-44 age group is more severe than workers above 45 years old. This contradicts the commonly held belief that older workers are most vulnerable in a crisis.

The paper attributed this phenomenon to three factors;

  1. more government support for older workers with lower wages,
  2. middle-age workers face a higher degree of competition from foreign and younger workers, and
  3. their higher wage level which makes them more susceptible to retrenchment and salary cuts.

This is the group that is likely to be sandwiched too – having to take care of their children as well as their aged parents.

It is already tough in normal times but this pandemic has just made it real bad for this group. We hope this Sandwich Generation guide is helpful in such times.

76% had less than 6 months of savings (among those who had suffered more than 10% pay cuts)

One of the personal finance tenets is to have 6 months of emergency savings to tide through unforeseen bad circumstances. Covid-19 is one such case since it could lead to either a loss of job or a pay cut. One would have to dip into his savings to subsidise his living expenses.

The DBS’s report is a depressing one.

Those who had suffered more than 10% pay cuts do not have sufficient savings; 76% of them had less than 6 months of savings!

The worst is that the lowest income group (<$2,999) made up the majority of those with less than 1 month savings.

(P.S. Savings data may be less accurate in this study, considering that individuals can put their savings in other bank accounts. Comparatively, salary crediting data is more accurate because it is unlikely someone would split the salary into more than one bank account.)

The Worst Performing Demographic Group

Based on what we have read so far, we believe that the group who need the most help would be those in the 35-44 age group, who have suffered more than 50% pay cut and have less than 1 month of savings.

Retail investors were buying stocks

There’s a bright side to things – mostly for the more fortunate who could invest.

The retail investors were piling into the stock market when the stock market dipped during Covid-19. On the contrary there were institutional outflows at the same time.

Retail investors were quite savvy afterall – buying low when the market panicked! But not all did well because those who invested in funds could have sold at the lows as shown by the institutional outflows during the period.

Investments opportunities abound, many retail investors have shifted their asset allocation to equities and away from bonds and unit trusts.

These investors tend to be higher-income earners with adequate emergency funds and are now able to capitalize on market opportunities.


While the report is derived from DBS’s customer database, we feel that the database is large enough to provide a pretty accurate reflection of the economic situation for workers as they face the Covid-19 storm (almost everyone has a DBS/POSB account).

The lower-income have been and will continue to be the most affected. The crisis has exposed and will further exacerbate the disparity between the top and bottom segments of the population.  The middle-income workers have also not been spared, and we can expect things to get worse when the measures are pared down. Most of the data in the report are only till May.

Will data from subsequent months reflect an improvement or a deterioration of the situation?

Will the $108 billion in various measures rolled out by the government be sufficient to tide us through the upcoming storm? Only time will tell.